Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, what assessment he has made of the (a) potential for reduction in the cost of payments transactions and (b) effect of changes in that cost on financial inclusion.

There are many types of different transactions, and government has not made a comprehensive assessment of the potential for reduction in the cost of payment transactions, or the effect of such changes on financial inclusion.

However, the Government is taking action to drive down the cost of transactions. As an example, the interchange fee regulation (which came into force in December 2015 and caps one of the costs associated with card) is thought to have saved businesses c£500m in transaction costs^[1], and is encouraging firms to pass on this saving to customers.

From 13 January 2018, for most retail payments, merchants will also not be able to add a surcharge just for using a particular payment instrument.

The Government is also supporting competition in payments to drive down costs. The second Payment Services Directive (PSDII) will provide for greater competition by creating a regulatory regime for new payment initiation services, which are generally lower cost than card services.

Furthermore, in 2015, the Government established the Payment Systems Regulator (PSR) in 2015, with statutory objectives including promoting competition and innovation, and ensuring that user needs are taken into account.

[1] According to analysis by the British Retail consortium